PoL refunds almost 7 million for travel certificates

November 6, 2008 Michele Donohue

The Points of Light Institute (PoL) has processed thousands of refunds totaling close to $7 million since finding financial discrepancies in its eStore this summer.

“As an organization, we have tried to deal with this situation with as much transparency as possible, to apply the right organizational remedies, and also to share our lessons in order to prevent other organizations and individuals from suffering from the actions of rogue individuals,” CEO Michelle Nunn said in an email to stakeholders on Tuesday.

An independent contractor, Maria Herrmann, who has since been terminated, ran the eStore for the Points of Light Foundation since 2003. The Points of Light Foundation in Washington, D.C. merged with Atlanta-based HandsOn Network last year to create the newly branded Points of Light Institute.

The eStore was authorized to sell donated goods through the eBay store, but Herrmann began selling travel packages on consignment that created “outstanding liabilities” and used some funds for personal expenses, according to Nunn. Herrmann was authorized to sell travel but not on consignment. An investigation by the U.S. Attorney’s Office for Washington, D.C. is still pending. There are no plans to reopen the eStore.

Pat Chandler, PoL senior vice president of external affairs, said the organization tried to keep all stakeholders – donors, affiliates, partners and volunteers – informed about the situation at every juncture. “We wanted to be as transparent as possible and make sure that people knew ‘here’s what happened, here’s what we did.’ We wanted to share that and get some closure and move forward,” she said.

The more than 4,500 refund claims were processed using funds from insurance, designated gifts and loans, with PoL avoiding general donations for refunds. “When some of our supporters learned of the situation, they graciously came forward to offer their support in a number of ways – by volunteering their expertise and helping to secure designated gifts and resources to help us take care of those impacted. I think we are very fortunate and very grateful toward those supporters,” said Chandler.

A board-authorized task force was created to make recommendations to the organization. Among the recommendations were an audit of internal controls related to contractor relationships and ecommerce activities in general and to consolidate financial, human resources and technology management. Those areas had been split between the Atlanta and D.C offices but will be based in Atlanta going forward. Chandler said that PoL would maintain a strong presence in Washington, D.C.

PoL placed an Oct. 15 deadline on refunds and has processed 98 percent of the claims, with the remaining handled on a case-by-case basis, and should finish in the next week. Three customers out of the more than 4,500 refund claims have decided to file legal action – one in small claims court in Iowa and two in Circuit Court in Florida – despite being offered refund checks. Customers who endorsed refund checks waived litigation rights for that claim.

PoL alerted customers on July 4 after discovering the irregularities in June and suspended all travel bookings that would depart after July 15. The organization was aided by Mitch-Stuart Inc. in fulfilling travel that had been scheduled before July 15, while customers with plans after that date were entitled to a refund.